A textile company has the production function Q =
min{0.25K, 0.5L}, where K is units of
capital and L is hours of labor.
a. Without
any warning, the price of capital doubles. What should this textile
company do in response?
b. If
this textile company were planning a new plant, would there be any
advantages to a larger facility?
A)Since the production function is Leontief production function, any increase in price of capital will not change the demand of any input because there is zero substitution effect
B) No because these textile company represent constant return to scale. Thus any increase in plant size or adding a new plant will not work
A textile company has the production function Q = min{0.25K, 0.5L}, where K is units of...
Priyanka's company has the production function Q=100K^0.5L^0.5, where Q measures output, K measures machine hours, and L measures labor hours. Suppose that the rental rate of capital is R=$30, the wage rate is W=$15, and the firm wants to produce 5,000units of output. Use the Lagrange method to find the optimal input mix. What the optimal level of K & L?
Tiffany's company has the production function Q=2K^0.5L^0.5, where Q measures output, K measures machine hours, and L measures labor hours. Let the wage rate be W, and suppose that the rental rate of capital is R=$20 and the firm wants to produce 400 units of output. Use the Lagrange method to find the demand curve for labor as a function of the wage rate. Your answer will have L on the left hand side of the equation. On the right...
Draw the isoquant of following production function and indicated level of output. Q=min(2L,0.5L+0.5K,K) Q=4
Suppose a firm’s production function is given by q = min{3K,6L}, where K is capital and L is labor. If the wage increases, what happens to the firm’s use of labor in production (relative to capital)? Explain.
Suppose the firm's production function is Q = 2KL where Q is units of output, K is units of capital (which are fixed at 2), and L is units of labor. a. What is the firm’s short-run production function? b. Over the labor input usage range of 0 to 5, that is L ranging from 0 to 5, graph the firm’s Total Product curve. c. Derive and graph the firm’s Average Product curve and the Marginal Product curve. Graph/plot them...
Aamir's company has the production function Q=8K^0.75L^0.25, where Q measures output, K measures machine hours, and L measures labor hours. Suppose that the rental rate of capital is R=$120, the wage rate is W=$20, and the firm wants to produce 800 units of output. Use the Lagrange method to find the optimal input mix. What the optimal level of K?
A company has the production function Q = min{K, L}. The price of capital is $50 per unit while the price of labor is $75 per unit. On a graph, plot isoquants for quantities 10, 20, and 30, as well as the isocost line for a quantity of 20. Note the cost-minimizing levels of capital and labor on your graph given the target production level of 20 units. The McCue Corporation is a house-painting business. For a standard-sized house, it...
A firm has the following production function Q= √KL Where Q is output per week and K and L are units of capital and labor per week. If rental price of capital v= 100 per week and the wages w = 400 per week obtain the quantity of K and L that min the cost for Q = 10.
A firm has a production function of Q=20K^.2*L^.8 where Q measures output, K represents machine hours, and L measures labor hours. If the rental cost of capital (r) equals $15 the wage rate (w) equals $10, and the firm wants to produce 40,000 units of output, how much labor and capital should the firm use?
Suppose the production function for automobiles is ? = ?? where Q is the quantity of automobiles produced per year, L is the quantity of labor (man-hours) and K is the quantity of capital (machine hours). a) What is the total product (number of automobiles) if the firm uses 25 man hours and 2 machine hours? b) Sketch the isoquant corresponding to a quantity of Q=50. c) What is the general equation for the isoquant corresponding to any level of...